And perhaps the best way to resolve the fiscal cliff dilemma is to tumble over it and see what happens. The deadline for action is Jan. 1.
If automatic spending cuts go into place, cuts neither Republicans nor Democrats will like, not to mention the general public, and virtually everyone’s taxes are raised, then maybe there will be some public pressure to do something. So far, I have not really noticed any public pressure.
The problem is that both sides are wrong. You can’t on the one hand just keep spending and spending and even at an ever higher rate while revenues diminish. And you can’t climb out of a financial hole without raising revenue.
I think most economic experts say that simply cutting alone won’t work.
President Obama’s decisive re-election (although Romney did get 47 percent) seems to indicate that the majority of the electorate does not want to scrap public spending, probably in particular on things like Social Security and Medicare.
Meanwhile, a story teaser in the Wall Street Journal (I don’t subscribe so sometimes I just get the headline or first paragraphs) said that the Republicans can’t come to an agreement on fiscal cliff talks because much of their membership refuses to do anything that would lead to increasing taxes on the rich (“the rich” I think has a flexible definition, but really in this country if you make more than $100,000 per year, you are at least approaching rich, even though others make millions and billions).
And I personally think the refusal to hike taxes on the rich is senseless, but maybe no more senseless than refusing to hike taxes on the middle class.
Let’s simplify the tax code first, reducing the myriad of loopholes and gimmicks, and then maybe we won’t have to raise the rates as much as we might have to otherwise, and maybe, just maybe, there might be more equity in the tax codes and hopefully more support of the whole system.
And let’s restore manufacturing as our base. The service economy and living on housing bubbles just didn’t work.
Probably there will be a last-minute stop-gap action. That of course will not solve the problem. Then again, it will not hurt, I wouldn’t think. It just all seems so pointless, or futile.
Oh, and that thing about taxing the rich sometimes hits small businesses unfairly because they file their taxes as individuals is confusing to me. I mean maybe small businesses that do that need a better accountant. There must be some advantage to them by incorporating or going to some other such measure. But then again, what do I know. Nothing.